Overview of Krungthai Card (KTC)

Krungthai Card Public Company Limited (KTC), a leading provider of unsecured financial products, credit card services, and personal loans in Thailand, has released its 4Q24 financial results. The company has demonstrated resilience amidst economic recovery challenges, maintaining strong asset quality and delivering steady growth. This report dives into the key details of KTC’s performance and the outlook for 2025.

4Q24 Financial Performance

KTC reported a net profit of Bt1.89 billion for 4Q24, marking a 7% year-on-year (yoy) increase but a 2% quarter-on-quarter (qoq) decline. This result aligned with market expectations, although it was 6% below UOB Kay Hian’s internal forecast. Pre-provision operating profit rose by 9% yoy and 4% qoq, highlighting the company’s operational strength despite economic pressures.

Key Financial Metrics

• Total gross loans: Bt110.4 billion, up 4.7% qoq but down 1.1% yoy.
• Net interest income: Bt3.65 billion, up 0.7% qoq but down 1.3% yoy.
• Non-interest income: Bt2.92 billion, up 3.8% qoq and 16.1% yoy.
• Loan loss provision: Bt1.78 billion, up 10.3% qoq and 10.2% yoy.
• NPL ratio: 2.0% (up from 1.9% in 3Q24 but down from 2.2% in 4Q23).
• Net interest margin (NIM): 13.5%, slightly lower than 13.8% in 3Q24.

Loan Portfolio Analysis

The company’s loan portfolio showed mixed dynamics in 2024. While loans contracted by 1.1% yoy due to a cautious approach amidst high household debt, they expanded by 5% qoq in 4Q24. The credit card portfolio experienced a decline of 0.7% yoy, primarily due to regulatory changes increasing minimum repayments to 8%. However, the personal loan portfolio grew steadily, contributing to an overall 1.1% yoy loan expansion in 2024.

For 2025, KTC plans to balance growth with asset quality, leveraging the anticipated gradual economic recovery to achieve positive loan growth targets.

Provisioning and Asset Quality

KTC’s provisioning expenses increased by 10% qoq and yoy in 4Q24, resulting in a credit cost of 660 basis points, up from 610 basis points in 3Q24. Despite this increase, the company’s loan-loss coverage ratio remained strong at 369%, slightly down from 373% in the previous quarter. The overall NPL ratio for 2024 stood at 1.95%, comfortably within the company’s target of less than 2.0%.

KTC’s prudent approach to provisioning and asset quality is expected to continue in 2025, with a gradual reduction in credit costs anticipated as the economy recovers.

Participation in Debt Relief Programs

KTC is part of the Bank of Thailand’s “You Fight, We Help” program, designed to support financially distressed borrowers. The company has also introduced a financial relief measure for its credit card debtors, offering interest credits back to accounts. These initiatives are expected to have an insignificant impact on KTC’s overall financial performance.

Revised Earnings Forecasts

UOB Kay Hian has adjusted its earnings forecasts for KTC for 2025 and 2026:

Valuation and Recommendation

UOB Kay Hian maintains a BUY recommendation for KTC, with an unchanged target price of Bt60.00. This valuation is derived using the Gordon Growth Model, assuming a cost of equity of 11.5% and a long-term growth rate of 3%. The target price implies a 3.5x 2025F price-to-book ratio, approximately -0.5 standard deviations below its historical five-year mean.

Share Price Catalysts

Potential catalysts for KTC’s share price include government stimulus measures to boost domestic spending and a potential policy rate cut by the Bank of Thailand.

Environmental, Social, and Governance (ESG) Initiatives

KTC has made significant strides in ESG practices:

Environmental

• Offers 0% interest installment plans for solar rooftops.
• Provides special privileges for booking electric vehicles and wall boxes.

Social

• Provides education loans to ensure equal opportunities for aspiring students.
• Organizes a long-running debt-clearing campaign for KTC PROUD cash card members.

Governance

• Established a Business Ethics Manual, reviewed annually, to guide employee conduct.
• Formed sub-committees to oversee internal controls, audits, and risk management.

2024 Financial Targets vs. Actual Performance